Financial Risk Management
Financial risk management covers econometric and mathematical tools and methodologies a business entity uses to assess, value and monitor financial risks in capital markets activities. These risks could include market and credit risks. Market risk arises from security price fluctuations, and is calculated by tools such as VaR (Value at Risk), Monte Carlo simulation and stress testing. Credit risk originates from counter-party -- or business partner -- defaults, and is computed by internal models.
Capital markets are securities exchanges where investors buy, hold or sell a variety of financial products. A capital market helps a business entity raise financing -- by selling stocks or bonds -- to fund short- or long-term investment goals, operating commitments and major expansion programs such as mergers or acquisitions. Capital markets could be physically identifiable -- such as New York Stock Exchange -- or electronic trading platforms -- such as (OTC) over-the-counter markets.
A financial institution is a firm that engages primarily in lending, trading, investing or advisory activities on behalf of clients or for the firm's own benefit. A financial firm could be a bank, a hedge fund, a mutual fund or an insurance company. A financial institution is usually regulated by government entities, central banks and industry overseers.
Research analysts and investment bankers aid institutional investors in exploring and investing in emerging markets. Emerging markets are international financial markets or countries that haven't reached a development status similar to Japan and the U.S., but are showing signs of economic progress. Financial experts group the four major emerging markets under the acronym of BRIC: Brazil, Russia, India and China. However, the world is continually changing. According to "Bloomberg News," some economists predicted in 2014 that China would soon surpass the economy of more established markets and outpace the U.S. by 2024.
Corporate finance evaluates a business entity's financial data, analyzes short- or long-term investment needs and working capital trends. Corporate finance also focuses on identifying proper capital structure models for a company. Working capital is a measure of short-term cash availability, and equals current assets minus current liabilities. Capital structure models indicate how an organization funds it operations, and could include equity, debt and internal funds - also called retained earnings.
Public Debt Management
Public debt management helps a government entity understand financial needs or operating commitments and find funding sources to "balance" annual budgets. A balanced budget means a budget where revenues equal expenditures. A governmental body -- such as a federal or a state entity -- derives its revenues primarily from taxes, and spends such revenues on various public programs and employee compensation. A government may acquire financing by issuing debt products on securities exchanges.
- Whitman School of Management at Syracuse University: Research Topics - Corporate Finance
- Boston College: MF895: Advanced Topics In Corporate Finance
- University of Pennsylvania Wharton Finance Department: Topics in Corporate Finance
- Bloomberg News: China Set to Overtake U.S. as Biggest Economy in PPP Measure
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